Days ahead of Texas’ deadly blackouts, ‘the warning signs were there’
By James Osborne February 25, 2021
On Feb. 10, five days before frigid temperatures left Texas in the dark for days, the state’s grid manager released its forecast for power demand, predicting it would spike to more than 70,000 megawatt hours that coming Sunday – an all-time record for Texas in winter.
The forecast from the Electric Reliability Council of Texas, or ERCOT, went little noticed among the general public. But for energy traders, who live and die by the surpluses and shortages of the market, the demand prediction was dangerously close to all the power that would be available in perfect conditions — let alone during the freakish cold snap meteorologists were predicting.
“ERCOT’s own forecast was showing major capacity deficiencies,” said Adam Sinn, president of the electricity trading firm Aspire Commodities. ‘“How could ERCOT not see this coming? It was so obvious.”
In a system in which prices drive both production and planning, the roots of the crisis can be traced back to November, when ERCOT released its winter forecast. The grid manager predicted that seasonal power demand, or load, would peak at about 58,000 megawatts — far below the nearly 69,000 megawatts reached Sunday, Feb. 14, just before the system began to fail.
Had the forecast accounted for the possibility of more severe weather and projected, say, a peak demand of 65,000 megawatts in February — near the previous record — generators might have been better prepared to take advantage of higher prices in both the futures and real-time markets, said Aneesh Prabhu, an analyst with S&P Global Platts, an energy research firm.
“That’s how supply and demand work,” he said. “No construct will help you mitigate risk when you miscalculate the load by 20 percent.”